Relativity studio plans on hold

Bill to boost Hawaii tax incentive program has stalled

A bill to boost Hawaii’s film tax incentive program has stalled, along with Relativity Media and Shangri-La’s plans to build $400 million worth of production facilities in the state.

Last week, Relativity confirmed that it had proposed building the facilities contingent on the legislation passing. But legislators tabled the bill along with several other proposals Friday night when it came up for a final vote.

At this point, Hawaii will not vote on the proposal until January 2012.

The tax incentive bill included boosting Hawaii’s current 20% film incentive to 40% with a $25 million per-project cap. Contingent on that passing, Relativity said it would work with Shangri-La to build 180,000 square feet of production facilities.

According to Relativity, its joint proposals with Shangri-La would bring in $1.70 for every $1 spent by 2016, generating close to $2 billion for the state along the way.

State tax incentives have come under increased fire in recent months, with cuts proposed to programs in Michigan, Arizona and New Mexico.

Some analysts and recent studies assert that states lose money in the form of decreased funding to public services and that hiring local employees and spending money on local goods and services does not make up for revenue lost through incentives.